Infosys counters that Ravi Kumar delayed software development before joining Cognizant as CEO

Infosys Ltd filed a lawsuit in a US court on Thursday claiming that Kumar delayed Infosys’ healthcare claims processing software Helix by 18 months while he negotiated the switch to Cognizant. Kumar quit Infosys in October 2022 and took over as CEO of its rival in January 2023.

The allegations made by Infosys in a document filed on January 9, and reviewed by Mint, are a rare case against one of its former employees.

The countersuit further expands the legal battle between the world’s two largest software services providers. Teaneck, New Jersey-based Cognizant launched the first wave of attacks last August, accusing Bengaluru-based Infosys of stealing trade secrets from its medical software subsidiary TriZetto.

“Cognizant is committed to upholding the highest standards of integrity in all business operations and will take decisive action to address any allegations that harm its competitive position. Cognizant encourages competition, but competitors cannot compete unfairly, as Infosys has done, by leveraging Cognizant’s intellectual property. Cognizant’s software products are widely adopted in the market because they are best-in-class and most preferred by customers,” the company said in an email response to Mint’s query.

Your own healthcare solution

Infosys said it developed its own healthcare solution Helix as a competitor to Cognizant’s software products Facets and QNXT. Kumar was the president of Infosys at the time and played a key role in the company’s growth, the complaint said.

“But Kumar’s optimism and excitement about the Infosys Helix product suddenly changed in the spring of 2022. He began withdrawing support for Infosys Helix, rejecting requests for needed resources, thereby delaying completion… at least 18 months,” Infosys’ counterclaim reads.

It accused Cognizant of poaching talent critical to Helix and hindering its growth.

“Infosys has invested significant funds and resources to build Infosys Helix so far, but the product and business have been delayed by at least a year and a half due to decisions taken by Kumar with the help of (Shveta) Arora and (Ravi Kiran) Kuchibhotla, while They are planning a migration to Cognizant,” the company said in the complaint.

Arora is Cognizant’s senior vice president and global head of consulting, while Kuchibhotla is the company’s chief strategy officer.

Infosys, which had revenue of $18.6 billion last fiscal year, said it “suffered millions of dollars in lost sales and increased costs as a result of Cognizant’s anti-competitive conduct”.

Claims processing monopoly

The Bengaluru-based company said Cognizant was not allowing business in the healthcare sector to flourish because of its alleged monopoly on claims processing in the United States.

“This is an antitrust case involving Cognizant’s anticompetitive scheme to achieve, maintain and enhance its dominant position in the market for healthcare payment software and the market for related IT services for that software,” the counterclaim filed through Chicago on behalf of Infosys wrote. Jenner & Block LLP Law Firm.

Cognizant acquired QNXT and Facets in 2014 when it acquired TriZetto, which provides management solutions in the healthcare space. These products are used by health insurance companies in the United States to process claims.

Infosys and Cognizant have been using these two software products to serve clients in the healthcare industry.

The Bengaluru-based information technology (IT) services company accused Cognizant on six counts of not only damaging potential revenue but also causing anti-competitive conduct.

The company accused Cognizant of engaging in anticompetitive conduct by restricting training for executives who use Facets and QNXT software to serve clients. It also said Cognizant rejected vendors that could maintain both platforms and charged customers high fees because of a lack of competing software that could handle insurance claims.

“As a result of Cognizant’s anticompetitive program, health care payers covering 65% of the U.S. insured population continue to use Cognizant’s outdated software and pay more for that software and related IT services than they would in a competitive market without Cognizant,” the company said. conduct.” its proceedings.

not the first case

Infosys’ reference to Kumar’s complaint is not the first instance where the integrity of Cognizant executives has been called into question.

In November 2023, Wipro filed a lawsuit against former executive Jatin Dalal, accusing him of joining a rival company within a year of leaving Wipro. Dalal will take over as Cognizant’s chief financial officer next month.

That means Cognizant’s CEO and CFO are under attack from their former employer.

“The complaint has certainly put a spotlight on Cognizant’s leadership team, and the company will have to answer a growing number of questions from stakeholders. The board of directors,” said a former executive at one of India’s largest IT services companies who spoke on condition of anonymity. You may also have to get involved in solving the problem.

Cognizant’s revenue from healthcare customers is four times that of Infosys.

Infosys gets about 7.5%, or $1.4 billion, of its revenue from life sciences customers, while Cognizant gets 29.3%, or $5.7 billion.

Infosys and Cognizant have been vying for the position of India’s second largest IT services company. Infosys beat out Cognizant, reporting revenue of $4.89 billion for the three months ended September 2024. However, days later, Cognizant regained the lead with $5 billion in quarterly revenue.

Cognizant follows a January-December financial calendar, while Infosys follows April-March reporting.

Although Cognizant is listed abroad, more than 70% of its 336,300 employees are from India, which is why it is considered a traditional IT services company in India.

Infosys is asking the court to hold a jury trial and issue a warning to Cognizant, prohibiting it from engaging in what it considers anti-competitive conduct. It also asked the court to compensate Infosys three times the amount of financial losses it suffered, including legal costs.